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Report sides with restaurant on line

The recommendation says Aloha Utilities' reclaimed water costs are "unreasonable."

By Jodie Tillman, Times Staff Writer
Published February 26, 2008

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TRINITY - A report prepared for state regulators says Aloha Utilities should not force a Little Road restaurant owner to pay for the construction of a reclaimed water line.

The staff report of the Florida Public Service Commission called it "unreasonable" to make the owner of Alli Gators Florida Grill and Bar pay as much as $300,000 to build a 2,000-foot line serving not only the restaurant, but also several nearby properties, including a Wal-Mart Supercenter.

Commissioners will consider the staff recommendation on March 3 when they take up the nearly yearlong dispute between Aloha and Warren Dunphy of Realm Management over the line's construction.

Aloha in recent years has been requiring reclaimed water systems in new developments, partly as a conservation measure pushed by the state and partly as a way to safely dispose of wastewater.

In commission filings, the utility argues that its state and district environmental permits require it to provide reuse water to all new customers.

But the commission staff report, released late last week, says Aloha has "misinterpreted" some of its mandates from the Department of Environmental Protection and Southwest Florida Water Management District, known as Swiftmud.

The report says state officials have no rules requiring Aloha to supply reuse water to all customers or to require all new users to provide the infrastructure. The report also interprets a Swiftmud grant agreement saying that Aloha will continue to require new projects to build reuse systems to apply only to residential developments, not commercial ones.

Whether the report could have implications for other projects in Aloha's service area is unclear. Commission spokeswoman Cindy Muir said regulators take each project on a "case by case basis" and that the recommendation should be read only to apply to the Alli Gators project.

But Aloha president Steve Watford said he is concerned that if the commission goes with the staff recommendation, it would be a "precedent setting" decision that hurts the company's ability to get future developers to build the reuse systems. He added that he believes the staff report misinterpreted the permit and grant requirements.

"We believed, and still believe, that the directive was that we were to require anyone to hook up" to reclaimed systems, he said. "None of it says 'unless it's expensive.'"

Aloha wants Dunphy's company, Realm Management, to pay all the costs associated with building a 6-inch reclaimed water line that would start on the south side of State Road 54 and run east to Realm's property. The line would replace a smaller line that Wal-Mart built.

Last March, the utility required Realm to put up a letter of credit for $300,000 to cover the cost of the line before it would provide water and wastewater services to the restaurant.

Dunphy had signed an agreement in May 2006 saying he would build the line. But the agreement provided no price tag for the project, and Dunphy said he was pushed to do it just to get his restaurant off the ground. He filed a complaint with the commission last April.

Watford said if the developers don't pay, then the money to handle the wastewater would have to come from higher customer rates, "which is highly frowned upon."

Just this month, the commission approved a controversial proposal to nearly double Aloha's residential rates.

To help recoup Dunphy's costs, Aloha agreed to collect fees from future projects using the line over the next five years and refund the money to Realm Management. Those fees would be based on how much reclaimed water each development used.

Alli Gators and Realm's other project, two doctors' offices, would use less than 5 percent of the line. Dunphy argued that it would be impossible for him to recoup the costs, given that the owner of the largest nearby property has no plans to do anything with his vacant 30-plus acres in the next five years.

The report notes that other developments have had significant delays because of the expense of installing the reclaimed water lines. Trinity Springs Professional Center, for instance, agreed to accept the reuse water but did not think it should pay the full cost to extend the line.

The project's developers had planned to apply for state approval in July 2005. Because of the Aloha delays, the report says, the project has not gone anywhere.